May 02, 2006

Selling toys in India isn't child's play. The market is fragmented, most of the toys are made in the unorganised sector, and there are no toy retail chains worth the name. Nevertheless, it's an industry that has huge potential, since middle-class parents with high disposable incomes are spending more and more on toys for their children. The Internet may just be what's needed to give a fillip to the toy retail industry.

According to K. Vaitheeswaran, Chief Operating Officer at online shopping site Fabmall.com, there's a cultural reason why toy retailing in India hasn't really taken off: Parents traditionally didn't spend much on toys for their children, except for the occasional purchase. "With increasing consumer spends and middle-class spending in India beginning to reflect global trends, this may also change," he adds.

A survey of Internet users and their shopping habits by the Internet & Mobile Association of India (IAMAI) and Cross-Tab Marketing Services found that 16% of respondents had purchased toys online, while another 16% indicated their willingness to buy them in the future.

Says Deepa Thomas, Manager, Corporate Communications, eBay India: "Toys are a huge category on eBay worldwide with a gross merchandise volume (GMV; value of trade between eBay users) of $2.1 billion. In India, it's an evolving category, and we have seen good traction in the toys category. A toy sells on eBay India every hour."

It isn't just the kids who like their toys. "Interestingly, young adults in the age group of 18-30 are some of the biggest online buyers of toys like radio-controlled cars, planes, helicopters and video consoles," says Thomas. Parents, she adds, are the next biggest group and look primarily at toys like educational laptops and hotsellers like Beyblades.

Thomas feels that since young adults in India have already taken a fancy to online commerce, it won't be difficult for toy retailers to attract more customers through the Internet. "While many of them buy a mobile phone or a digital camera as a first purchase, quite often the repeat purchase is a cool toy like a remote-controlled vehicle," she says.

The consensus seems to be that online toy sites must have a great content to attract buyers. "People are particular when they purchase toys for their kids. Hence web sites must provide detailed content and indicate the age groups for which the items are meant for. Aggressive promos are required to move toys up in the consumers mind as a gifting category," says Vaitheeswaran.

Thomas feels that what's needed is creating awareness of the latest trends, fun yet educative listings and targeted marketing. "If the listing of the toy or site is fun, interactive and yet educative, buyers will come and shop there. Also, we have seen when certain toys are hard to find (like the Xbox or the PSP), buyers are very keen to ensure that they are trendsetters by possessing them. Information is key, as some of these toys are quite hi-tech and people spend thousands of rupees on them," she says.

What kind of marketing strategy should online retailers adopt? Vaitheeswaran feels that it's the offers and the range of products that attract customers. "Web stores must expand the range of their toy selections so that customers can browse and order. A limited range is of no use really, since parents will move on to books, CD-ROMs etc," he says. Thomas says eBay targets buyers online through search engine marketing, online advertising and mailers.

It's a good idea for online retailers to target both parents and children. For items meant for kids below the age of seven, says Vaitheeswaran, the parents should be the target. "Above that, it is a good idea to get kids interested first and then drive purchase from parents," he says.

Soft toys, remote-controlled games and ethnic toys are the biggest sellers on Fabmall.com. On eBay, it's educational toys, baby products, electronic toys etc. And festivals are when sales reach their peak. "Christmas is a good season for toys and games. Sales of romantic and mushy gifts - especially soft toys - peak during Valentine's Day," says Vaitheeswaran.

Brick-and-mortar toy retailing in India is still in its infancy in India. The niche is pretty much vacant, and by offering a wide range of products and reputed brands, it's the perfect opportunity for online retailers to occupy that space.